What are the optimal tari¤s of the US? What tari¤s would prevail in a worldwide trade war? What are the gains from international trade policy cooperation? And what gains can be expected from future reciprocal trade negotiations? I address these and other questions using a uni…ed framework which nests traditional, new trade, and political economy motives for protection. I …nd that US optimal tari¤s average 66 percent, world trade war tari¤s average 63 percent, the welfare gains from international trade policy cooperation average 4.4 percent, and there is almost no scope for future reciprocal trade negotiations. JEL classi…cation: F11, F12, F13

We characterize the optimal tariff bindings in a trade agreement among asymmetric countries that are subject to idiosyncratic political-economy shocks. We find that the optimal tariff binding is decreasing in the relative size of the importing country and its degree of comparative disadvantage. Moreover, under an optimal agreement a smaller country is more likely to apply a tariff that is substantially below its tariff binding. Using applied and bound tariff data from WTO member countries, we …nd strong empirical support for our predictions.